In a related story, perhaps MGIC has “given back their credit card”. MGIC Investment Corp. took an unusual step last week to cut costs: they began dismantling what had been its $300 million borrowing facility. MGIC notified the lenders under its bank revolving credit facility that it's ending all of the banks' commitments. By doing so, MGIC effectively terminated the credit facility-as well as the insurer's obligation to pay a facility fee of about $0.5 million a quarter, according to regulatory filings. Apparently they also told banks that they would repay the entire $200 million outstanding under the credit facility, thus saving the quarterly interest cost of about $2 million.

Let me preface this next paragraph with a disclaimer: I have seen nothing firm in writing on this. But I have heard from two separate sources, after being denied a few weeks ago, that Radian is exiting doing business in California. Companies always run the risk of being accused of “redlining” when they do things like this, but I am sure, if this is true, they’ve thought this out. (Redlining: to withhold home-loan funds or insurance from neighborhoods considered poor economic risks or to discriminate against in housing or insurance.)

At least locks are coming in the door, right? Last week’s mortgage applications climbed out of the 7-month low they set the week before, according to the MBAA. Apps were up 6.6%, and the activity last Friday and Monday are keeping lock desks busy. Speaking of the MBAA, they’ve lowered their 2009 projections for total originations from $2.8 trillion to $2.0 trillion for 1-4 units.

As we saw yesterday, Existing Home Sales were up 2.4%, although the median home price (which includes “distressed properties”) was down almost 17% from a year ago. First time home buyers accounted for almost 30% of sales! We also had the $40 billion 2-yr note auction go off just fine, which hopefully will be good news for today’s $37 billion 5-yr note auction.

And yesterday the FOMC (Federal Open Market Committee) began its two-day meeting, with the announcement today at 11:15AM PST. (Look for no change to overnight rates, not that they impact 30-yr mortgage rates directly, but the FOMC's assessment on the outlook for the economy and inflation will be closely examined. Most expect the statement to re-emphasize the need to keep rates low for an extended period of time, since any major improvements in the economy are way off.)

This morning we’ve already had Durable Goods Orders, which rose 1.8% for May, and later at 10AM EST we have New Home Sales. We find rates virtually unchanged from Tuesday afternoon – unusual for a non-holiday period.

One day while he was at the track playing the ponies and all but losing his shirt, Mitch noticed a priest who stepped out onto the track and blessed the forehead of one of the horses lining up for the 4th race. Lo and behold, that horse a very long shot, won the race. Before the next race, as the horses began lining up, Mitch watched with interest the old priest step onto the track.

Sure enough, as the horses for the 5th race came to the starting gate the priest made a blessing on the forehead of one of them. Mitch made a beeline for a betting window and placed a small bet on the horse – and it won.

Mitch collected his winnings, and anxiously waited to see which horse the priest would bless for the 6th race. The priest again blessed a horse. Mitch bet big on it, and it won. Mitch was elated. As the races continued the priest kept blessing long shot horses, and each one ended up coming in first.

By the last race, he knew his wildest dreams were going to come true. He made a quick dash to the ATM, withdrew all his savings, and awaited the priest's blessing that would tell him which horse to bet on. True to his pattern, the priest stepped onto the track for the last race and blessed the forehead of an old nag that was the longest shot of the day. Mitch also observed the priest blessing the eyes, ears, and hooves of the old nag. Mitch knew he had a winner and bet every cent he owned on the old nag.

He then watched dumbfounded as the old nag come in dead last.

Mitch, in a state of shock, made his way down to the track area where the priest was. Confronting the old priest he demanded, "Father! What happened? All day long you blessed horses and they all won. Then in the last race, the horse you blessed lost by a Kentucky mile. Now, thanks to you I've lost every cent of my savings, all of it!"

The priest nodded wisely and with sympathy. "Son", he said, "that's the problem with you Protestants; you can't tell the difference between a simple blessing and Last Rites".

Rob

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